Oliver Mangan, Chief Economist at AIB, discusses how labour market figures, published by the CSO last week, for the first quarter of 2015 contained good news on the Irish economy.
Broad-based Jobs Growth Positive but Road is Long
Labour market figures, published by the CSO last week, for the first quarter of 2015 contained more good news on the Irish economy. The data show that Ireland is seeing strong, broad-based job growth, with sharply falling unemployment, writes Oliver Mangan Chief Economist at AIB.
Employment rose by 12,500, or 0.6% in quarter one, following increases of 13,000, or 0.7% in the fourth quarter and 12,000 (+0.6%) in the third quarter of last year.
Thus, employment is rising at a strong but steady pace. On a year-on-year basis, employment was up by over 41,000, or 2.2%.
Full-time employment actually rose by 52,000, or 3.6%, over the past year, with a decrease of some 11,000 in part-time jobs. This shows that, as the economic recovery gathers strength, more and more people are able to move out of part-time employment into full-time jobs.
Another positive sign is that the job gains were broad-based, with employment rising in 10 of the 14 sectors in the CSO survey. Construction saw the biggest gain, with jobs growth of almost 20,000, or 19%, in the year. Meanwhile, employment in industry rose by over 9,000, while finance, insurance and real estate saw a rise of 4,500.
Furthermore, all regions of the country saw a rise in employment over the year, except for the West, with particularly good increases in Dublin and its surrounding hinterland. Overall, total employment now stands at 1.94m, its highest level since mid-2009.
Employment has now risen for 10 consecutive quarters from its low point of 1.83m reached in mid-2012, an increase of some 110,000. However, employment is still 210,000 below its peak level reached in the opening quarter of 2008, largely because of the much lower numbers working in construction.
The steady rise in employment over the past couple years, combined with ongoing emigration, have resulted in a sharp fall in unemployment. The unemployment rate dropped to 9.9% in the first quarter of 2015, down from 12.1% a year earlier and a peak unemployment rate of 15.1% reached in early 2012.
The CSO data show the number of unemployed stood at 215,000 in quarter one, down from 261,000 a year earlier and a peak level of 327,000 reached at the start of 2012. Thus, unemployment fell by 45,000 in the past year and is now 112,000 below its peak.
Based on recent trends, the unemployment rate should fall to 9% or below, by the end of this year. However, while now comfortably below the average eurozone jobless rate of 11.3%, Ireland still has some way to go before its rate drops to US and UK levels of around 5.5%.
There is also quite a disparity in unemployment rates across the country.
The unemployment rate stands at 8.8% in Dublin and 7.8% in the Mid-East. By contrast, the jobless rate is a good deal higher, at 12.8%, in the South-East, and 12.4% in the Midlands.
Both of these regions, though, have seen sharp drops in their jobless rates and rising employment in recent times. Two years ago, the unemployment rate stood at 18.4% in the South-East and 17.1% in the Midlands. It would seem, then, that economic recovery has spread to most regions but the starting position was much worse in some areas.
The fall in unemployment has also been facilitated by emigration. Net outward migration has averaged around 30,000 per annum for Irish nationals in recent years. Combined with a falling participation rate, this has resulted in a declining labour force.
The labour force, though, may be close to stabilising. It fell by just 4,000, or 0.2%, in the past year and we would not be surprised to see labour force growth turn slightly positive in the next few quarters.
Overall, while recent trends have been encouraging, there is still some distance to go before Ireland returns to a more normal labour market.